Basic Policy on Corporate Governance
We recognize that we are a company open to the market. Through active communication with everyone we work with, including shareholders, customers, officers, and employees, we aim to realize our management philosophy of Supporter Value Creation through the strength of all our employees, and to maximize corporate value and shareholder value over the medium to long term. As a company founded on the philosophy of wanting to help people when they need it, we believe our mission is to realize a society in which human society, corporate activities, and the global environment are all sustainable.
Guided by our corporate philosophy of Transparency, we aim to disclose not only the information required by law, but also to proactively share our corporate philosophy, culture, management strategy, business model, and vision for future value creation. By communicating our fundamental approach to corporate value, we seek to foster mutual trust with our supporters and to co-create the enhancement of corporate value over the medium to long term.
Corporate Governance Structure
We are a Company with a Board of Corporate Auditors. Based on the basic approach to corporate governance described above, we have adopted our current system. Under this structure, the Board of Directors, composed of directors well versed in our business together with independent outside directors, makes accurate and prompt decisions on important matters of business execution and supervises the directors' performance of their duties. At the same time, the corporate auditors, who hold statutory audit authority, audit the directors' execution of their duties from a fair and independent standpoint, thereby strengthening the oversight of management. We have judged this system to be effective both for ensuring the effectiveness, fairness, and transparency of management and for achieving our sound and sustainable growth.
Board of Directors
To realize management effectiveness, fairness and transparency, the Board of Directors is composed of directors well versed in our business together with independent outside directors. The Board makes accurate and prompt decisions on important matters of business execution and supervises the directors' performance of their duties. To enable directors to carry out and oversee their managerial duties effectively and efficiently, we have adopted an executive officer system. Under this system, authority over business execution is delegated to executive officers, while the Board of Directors supervises the business execution carried out by them. Each corporate auditor attends Board meetings under the individual responsibility system and confirms both the decision-making status of business execution and the supervisory status of the directors' performance of their duties.
To secure the balance and diversity of knowledge, experience, and abilities necessary for our sustainable growth and the medium to long-term enhancement of corporate value, we select directors using tools such as a skills matrix. Within this framework, we appoint outside directors, including corporate managers and experts, so that they comprise one-third or more of all directors.
Board of Corporate Auditors
The Board of Corporate Auditors is composed of internal auditors with deep insight into our Group's business and outside auditors with outstanding expertise. From a fair and independent standpoint, the Board conducts business audits and accounting audits of the directors' business execution, thereby strengthening the oversight of management. In this way, it works to ensure the effectiveness, fairness, and transparency of management and to contribute to our sound and sustainable growth.
The Board of Corporate Auditors consists of up to four auditors. Should the number of auditors fall below the minimum required by law, substitute auditors may be appointed.
Nomination Committee
As an advisory body to the Board of Directors, the Nomination Committee comprehensively evaluates the candidates for directors, corporate auditors, and executive officers who are presented by the Board to newly join our management team, assessing them from such perspectives as their performance capabilities and character, and reports its findings to the Board of Directors.
The chairperson is an outside director, and the Committee is composed of three outside directors and two outside corporate auditors, together with one internal Representative Director and Chairman, one Representative Director and President, and one corporate auditor. By having outside officers make up a majority of its members, the Committee enhances its independence and objectivity.
Compensation Committee
As an advisory body to the Board of Directors, the Compensation Committee evaluates, from an objective perspective, the proposals on the compensation system and compensation amounts for our directors and executive officers that are presented by the Board, basing its assessment on the abilities and achievements of each director and executive officer according to their position and responsibilities, and reports its findings to the Board of Directors.
The chairperson is an outside director, and the Committee is composed of three outside directors and two outside corporate auditors, together with one internal corporate auditor. By having outside officers make up a majority of its members, the Committee enhances its independence and objectivity.
Status of Officers
Composition of the Board of Directors
To ensure the balance of knowledge, experience, and abilities, as well as the overall diversity of the Board of Directors that are necessary for our sustainable growth and the medium to long-term enhancement of our corporate value, we have established a skills matrix. This matrix clarifies the requirements for directors as derived from our management strategies, including our Group's management philosophy, vision, and medium-term management plan. In light of this skills matrix, the Board of Directors is composed of individuals suited to serve as our directors, who possess the abundant experience, deep insight, and advanced expertise that we require. Of these, at least one-third of all directors are outside directors, such as corporate managers and experts.
| Corporate Management | Finance & Accounting | Legal & Risk Management | Business Strategy & Marketing | Innovation & DX | Human Resources & Organization | Global Business | Sustainability | |
|---|---|---|---|---|---|---|---|---|
| Tomohiro Ishibashi | ○ | ○ | ○ | ○ | ○ | ○ | ||
| Masanori Yoshitake | ○ | ○ | ○ | |||||
| Daisuke Abe | ○ | ○ | ○ | ○ | ||||
| Izumi Hayashi | ○ | ○ | ○ | ○ | ||||
| Ken Tamagawa | ○ | ○ | ○ | ○ | ||||
| John Lagerling | ○ | ○ | ○ | ○ | ○ |
Executive Compensation
Director Compensation Structure
The compensation of the Company's directors is structured as a system linked to shareholder returns, so that incentives for the sustainable improvement of corporate value function fully. In determining the compensation of individual directors, our basic policy is to set an appropriate level based on each director's job responsibilities. This compensation consists of fixed compensation (a fixed monthly amount) and performance-linked compensation.
Fixed Compensation
A standard amount is set for each position, taking into account the level of ability and responsibility required, and is paid as monetary compensation.
Performance-Linked Compensation
For executive directors, performance-linked compensation consists of two components. As short-term performance-linked compensation, it comprises a monetary bonus and performance-linked stock compensation, paid within a range of 0% to 200% based on a performance growth rate indicator that is appropriately determined by the Board of Directors in line with the medium-term management plan. As medium to long-term performance-linked compensation, it also includes restricted stock compensation.
The standard level of short-term performance-linked compensation is set according to the position of the eligible executive director, and the actual payment rate varies according to the performance evaluation indicators for each period. This compensation is paid after the performance evaluation for each period. One-half of the amount determined according to performance is paid in the Company's common stock equivalent to that amount, and the other half is paid in cash equivalent to that amount.
As financial indicators, the performance evaluation indicators are the consolidated sales growth rate and the consolidated operating profit margin, which are suited to providing incentives for achieving the goals set forth in the medium-term management plan while also taking into account the perspective of shareholders and investors. In addition, as the Company grows its business, we are working to realize a society in which human society, corporate activities, and the global environment are sustainable. As a company that upholds the Dream of wanting to protect the future of the Earth, we will add climate-related indicators as non-financial indicators.
| Performance Evaluation Index | 【Financial Indicators】 | Consolidated operating profit margin Consolidated sales growth rate |
| 【Non-financial Indicators】 | Reduction rate of CO2 emissions per unit of sales CDP Climate Change Score |
As medium to long-term performance-linked compensation, restricted stock compensation is compensation under which the Company's common stock is allocated to eligible executive directors, subject to a certain transfer-restriction period and to provisions allowing the Company to acquire the stock without consideration. It is intended to enhance corporate value over the medium to long term from a governance perspective.
Limit
The limit on monetary compensation for the Company's directors (fixed compensation and performance-linked compensation) is 500 million yen. In addition, the limit on compensation in the form of monetary compensation claims under the performance-linked stock compensation system and the restricted stock compensation system is 200 million yen.
Compensation Structure for Audit & Supervisory Board Members and Outside Directors
The compensation of the Company's Audit & Supervisory Board Members consists of fixed compensation, with an annual limit of 100 million yen, determined according to their duties and to whether they serve on a full-time or part-time basis. Outside directors and Audit & Supervisory Board Members are paid fixed compensation only, as they are independent of business execution.
Compensation Determination Process
The Company has established a voluntary Compensation Committee made up of six members in total: three outside directors, one Audit & Supervisory Board Member, and two outside Audit & Supervisory Board Members. The policy and method for calculating compensation, as well as the compensation system and compensation amount for each director, are determined by the Board of Directors after prior consultation with the Compensation Committee, based on an objective evaluation of each director's abilities and achievements in line with their position and responsibilities.
